Environmental Analysis of Automobile Industry

This project analyzes the internal and external environment of Aston Martin, a British independent automobile manufacturing company, using models like SWOT, PESTLE, Value Chain, and Porter's Five Forces.

Assessment 1 Environmental
Analysis of Automobile
Industry

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Porter’s five forces......................................................................................................................3
SWOT analysis...........................................................................................................................4
Pestle analysis.............................................................................................................................5
Porter's Value..............................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Environmental analysis is said as the process which helps in the examination of the all
the components which are either internal or external that has the influence on the organizational
performance. For this project the chosen organization is Aston Martin is British Independent
Auto mobile manufacturing company which makes luxury sports cars. In this project the internal
and external analysis of the organization is done through models like SWOT, PESTLE, Value
Chain and also the competitive advantage their core values.
MAIN BODY
Porter’s five forces
Porter’s fiver forces a model that provides the different insights into the opportunity and
threats to the organizations corporate strategy. It helps in understanding the internal environment
which related to the competition of the organization. This model talks about the five different
competitive forces which are as follows,
Supplier bargaining power:
The UK auto mobile industry is considered to be divided into the different component
and is helpful for manufacturing segment. For Aston Martin there are 2600 different components
which manufacturers in UK. Their contribution in the production of the auto mobile is over £4.5
billion. Thus, the bargaining power of the suppliers is not very strong as there are so many of
them.
Competition:
There has been an increase in the new sports car organizations which have increased the
bargaining capacity of the customers. As the more companies have started to build cars which
are ultra-high end vehicles Aston Martin as a car manufacturing company has to face
competition which has resulted in the decrease of their profits (Yang, 2019). In the UK market
there are other brands which are above this company in dominating the market.
Threat of Substitute :
This organization has successfully placed itself in the luxury car segment which is not a
necessity for most of the customers. As this product is uxorious therefore the customers that want
to buy the cars of Aston Martin will only buy the products of this company. Still this company

faces some competition from the companies like Lamborghini Gallardo that apparently satisfy
the same need.
Bargaining power of the customers :
The customers which are the interested in purchasing the products of this company. It can
be said that the high end luxury market often does not need to ensure that the customers have
wide variety of the options of cars (Ferràs-Hernández, Tarrats-Pons and Arimany-Serrat, 2017).
However, due to the increase in the competition for this business with other companies entering
into this market has handed the power of bargaining in the hands of the customers.
Threat of New Entrants :
As the investment requirements in this business is very high there is low risk of threat
from any new entrant however, new technologies related to the electronic cars has posed some
real challenges for companies like Aston Martin to develop their own product before the
customers preferences start shifting towards the new technologies.
SWOT analysis
In order to analyse the internal environmental factors which impacts the organization it is
essential to understand the different opportunities and challenges faced by the company and how
its strengths and weakness are effecting it.
Strength :
Aston Martin is a company which is known for its heritage and brand name that has been
famous for years. It is brand which is very popular in the world even after there has been
introduction of so many other competitors. The brand name of this company perceives having
power, quality and beauty. Services & Maintenance provided by this company is also an of
world-class quality which attracts customers from all over the world (Manh Cuong and Hung,
2020.). This company has developed its brand image with the help of affiliations with the James
Bond film in which the famous character has been seen featuring this car that has given it the
most publicity it needed.
Weakness :
This company in the last few years have had some poor financial performances which has
been the reason factors such as Covid. Due to the impact of the Covid the entire Car manufacture
ring industry suffered as its market fell by more than 1.63m in the year of 2020 (Whittington,
and et.al., 2020). For a market which was so big before the pandemic it had a very slow return to

its normal state. Economic recession was a big part of the downfall of this industry. This
company has also seen some management issues as even though this company has been in the
industry for so long its still not among the top manufacturing auto-mobile companies.
Opportunities :
This organization has achieved certain opportunities which is related to its entrances in
new markets. The increase in the market of Russia is a great opportunity for the company as it
has started to over the German market. Other than entry into new market this company also has
the opportunity of introducing electronic cars. This will provide the company with benefits
regarding the growth of the customers share and also launch in the new market. The growth of
UK economy after the downfall of the pandemic has been the reason of growth.
Threats ;
The current economic downfall in the UK due to the factors like Brexit and Covid-19 is
considered to be the very impactful for the company in the growth (Zhikang, 2017). It is said that
due to the increase of the threat of the industry the business has been able to provide with the
latest technology which is the design of the justified premium prices which helps the companies
in claims. Threat which is present from the different competitors is real for this company as there
are many companies which have started to enter into the market of luxury cars. Threats from the
electronic cars is also very big for this organization as it has not yet launched its own electric car
model.
Pestle analysis
The business environment of Aston martin is impacted due to the different external
factors which can be explained with the help of the Pestle analysis,
Political :
The car manufacturing companies of UK is considered to be facing great issues in their
market due to the downfall of the economy. This has been due to the political issues which has
been going on in the country. Brexit which has been the reason for bringing some major supply
issues for this company. These issues have occurred in the company due to the terms of
agreement in the UK-EU trade. Other than that lock-downs implemented by the government has
also restricted the business of this company (Stakhovska, 2018).
Economical :

This organization has been effected due to the economy the most as it has had the
smallest sales figure since last 17 years (UK automotive faces challenges, but should not fear
them, 2021). This has been due to the rise of Covid-19 pandemic and also the lock-downs which
were implemented. Due to this pandemic there was very big economic recessions in the
organization. It was a very unfavourable scenario for vehicles sales but it had an even worse
impact on those companies which were under a lot of debt like Aston Martin.
Social :
The biggest social impact which has been on this company has been due to the down fall
of the economy which has impacted the customers preferences towards the brand which
produces luxury products. These luxury product of the company has shown drop in sales as
people are more concerned about their necessities in comparison to the luxury products. This
change in mentality has created a negative impact in the society towards luxury cars.
Technological :
As it is the twelfth largest manufacturer the vehicles around the world, its products are
more known for its design, process and technological innovations. However, there are other
companies which with the help of new technologies have started to grow in the industry. It is
also said that the growth of the R&D budgets needs the company to be slashed in the view of the
given economic downturn (Cuong and Hung, 2020). There has been an increase in the economic
influence which is towards the company.
Environment :
Due to the current trends in the consumer demand is regarding being more and ore fuel
efficient it has been essential for the business to view this as an important method of being
efficient as a business. It can be said that the compromise of the actual horse power of the
business would be helpful for the business in better fuel consumption.
Legal :
The laws in UK have certain legal procedures which they have to apply for their
automotive companies in order to divide them business into two major categories which is
helpful for regulating the import regulations which are related to the export of the vehicles. For
the Automobile manufacturers the UK taxation laws are comparatively lenient.

Porter's Value
Porter's value chain is considered to be a system which includes the companies either
upstream (suppliers) or downstream (distribution channels). This model includes tow generic
categories of activities such as,
PRIMARY ACTIVITIES
In this model there are five generic categories of primary activities,
Inbound Logistics :
The activities of this company are associated with receiving, storing and disseminating of
the inputs of the products. It can be considered as the material handling, warehousing of physical
products and also the architecture for receiving and store customer's information for the digital
media company. This company has successfully presented its inbound logistics activities.
Operations :
It is the way in which the organization is able to transform its raw materials into finished
products (Ahmad and Khalid, 2018). This is said to be the purpose of this article through which
customer data servers as the advertisements which are based on their uses as behaviours for the
client, moulding plastic for making products.
Outbound Logistics :
It can be said that the distribution of this organization is in all over the world as it uses it
to channel partners and reach the final buyers. However, due to the Brexit and Covid-19 there
has been an impact on the supply and logistics, distribution network, processing and scheduling
the warehousing.
Marketing Sales :
The brand name of this company is very famous already thus, it does not require much
convincing of customers for making the sales. These activities include marketing, channel
selection, advertising and promotions.
Services :
The after sales services of this company is also very successful for all its products. These
services are part supply, product forward and back-end alignment of software and post sales
maintenance of products and services.
SUPPORTING ACTIVITIES
In this model there are four generic support activities,

Firm Infrastructure :
As the part of the infrastructure the support activities of this company of the company
which is related to the quality management, planning, legal services, finance and accounting.
This organization is very capable in the management of all these activities and has been
renowned for the level of quality management (Liu, Zhao and Zhao, 2019).
Human Resources Management :
For an organization to be successful it is very important to become striving of the
learning organization. It is considered to be the key to the success of the organization. HRM
support activities which include, recruiting, training & development, skill assessment, people
planning, hiring selection and compensation which is helpful for both the business unit level and
corporate level.
Technological development :
This auto-mobile company needs to improve its technology in order to improve the
products. This is said as the source of the company which is helpful for the business in
processing engineering and field testing feature design technology selection and component
design.
The competition advantage which the business gets is from the different types of
activities such as the technological development and human resource management is considered
to be very important (Kaiser and et.al., 2019). Human resource management with the help of
hiring talented individual are able to make the organization more effective. Bringing new
technologies like electronic car is a way of giving the company a competitive advantage.
CONCLUSION
From the above project it can be concluded that Aston Martin needs to capitalize on its
opportunities and strengths in order to improve its competitive advantage. This project talked
about how the environment of the company is impacted because of the external and internal
environment of the organization.

REFERENCES
Books and Journals
Ahmad, Y. and Khalid, Z.B., 2018, December. A hybrid approach using SWOT and AHP to
prioritize the factors for indigenous production of automobiles: a case of Pakistani
automotive industry. In 2018 IEEE International Conference on Industrial Engineering and
Engineering Management (IEEM) (pp. 763-767). IEEE.
Cuong, N.M. and Hung, P.V., 2020. An analysis of available solutions for commercial vessels to
comply with IMO strategy on low sulphur. Journal of International Maritime Safety,
Environmental Affairs, and Shipping. 4(2). pp.40-47.
Ferràs-Hernández, X., Tarrats-Pons, E. and Arimany-Serrat, N., 2017. Disruption in the
automotive industry: A Cambrian moment. Business horizons. 60(6). pp.855-863.
Kaiser, C., and et.al., 2019, September. The Vehicle Data Value Chain as a Lightweight Model
to Describe Digital Vehicle Services. In WEBIST (pp. 68-79).
Liu, Z., Zhao, F. and Zhao, S., 2019, March. Basic principles of technology transformation in
long value chain in the manufacturing industry and key technology innovation issues in
China-A case study of the automotive industry. In 2019 8th International Conference on
Industrial Technology and Management (ICITM) (pp. 257-264). IEEE.
Manh Cuong, N. and Hung, P.V., 2020. Sea navigation-based Thai Canal implication: an
analysis of its effect on the Vietnamese maritime industry. Australian Journal of Maritime
& Ocean Affairs. 12(2). pp.83-94.
Stakhovska, V., 2018. B2B Digital marketing strategy for DXC technology enterprise.
Whittington, R., and et.al., 2020. Exploring Strategy Text and Cases. Pearson UK.
Yang, Q., 2019. Prediction of global value chain based on cognitive neural network-take Chinese
automobile industry as an example. Translational neuroscience. 10(1). pp.81-86.
Zhikang, L., 2017. Research on development strategy of automobile reverse logistics based on
SWOT analysis. Procedia engineering. 174. pp.324-330.
Online
UK automotive faces challenges, but should not fear them, 2021[Online]. Available through:
<https://justauto.nridigital.com/just-auto_magazine_mar21/uk_automotive_challenges>